Carriage Services, Inc. (CSV) Q2 2015 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and welcome to the Carriage Services Second Quarter 2015 Earnings Webcast and Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question and answer session and instructions will follow at that time. [Operator Instructions] As a reminder, this call is being recorded. I would now like to introduce your host for today's conference, Chris Jones, representing Carriage Services. You may begin.

Thank you, and good morning, everyone. We're glad you could join us, and we would like to welcome you to the Carriage Services conference call. Today, we will be discussing the company's 2015 second quarter results, which were released yesterday after the market closed. Carriage Services has posted the press release, including supplemental financial tables and information on its website at carriageservices.com. This audio conference is being recorded, and an archive will be made available on Carriage's website. Additionally, later today, a telephone replay of this call will be made available and active through August 9th. Replay information for the call can be found in the press release which was distributed yesterday. On the call today from management are Mel Payne, Chairman and Chief Executive Officer; Dave DeCarlo, President and Viki Blinderman, and Ben Brink, Chief Financial Officers. Today's call will begin with formal remarks from management, followed by a question-and-answer period. Please note that during the call, management will make forward-looking statements in accordance with the Safe Harbor Provision of the Private Securities Litigation Reform Act of 1995. I'd like to call your attention to the risks associated with the statements, which are more fully described in the company's report filed on Form 10-Q and other filings with the Securities and Exchange Commission. Forward-looking statements, assumptions or factors stated or referred to on this conference call are based on information available to Carriage Services as of today. Carriage Services expressly disclaims any duty to provide updates to these forward-looking statements, assumptions or other factors after the date of this call to reflect the occurrence of events, circumstances or changes in expectations. In addition, during the course of this morning's call, management will reference certain non-GAAP financial performance measures. Management's opinion regarding the usefulness of such measures, together with the reconciliations of those measures to the most directly comparable GAAP measures for historical periods, are included in the press release and the company's filings with the Securities and Exchange Commission. Now I'd like to turn the call over to Mel Payne, Chairman and Chief Executive Officer.

Thank you, Chris. Today we will discuss another outstanding quarter of financial performance. But importantly, the record results for the first six months, as well as the corporate development acquisition activity and senior leadership changes, that position Carriage for great success in the future. After our last conference call, Bill Heiligbrodt gave notice of his intent to retire next March, and as such transitioned out of his executive officer duties and responsibilities. Although he is still active, he is an advisor to me, and members of our OSGLT and Board of Directors. His duties and responsibilities as Principal Financial Officer, and with Investor Relations have been split between two young and highly capable members of our operations and strategic growth leadership team, Viki Blinderman, and Ben Brink, as Co-CFOs. Bill, Ben, and Viki are all here today. Viki will now provide a color commentary on our second quarter and first half performance. Viki?

Thank you, Mel, and thank all of you for joining us on the call today. We are pleased to report more record results for the second quarter of 2015. Carriage achieved second quarter adjusted diluted earnings per share of $0.34, a slight increase over 2014. For the first six months, the adjusted diluted earnings per share was $0.76, and almost 19% growth, and the largest we have seen in years. Just to let you know, the earning per share is impacted by 600,000 shares due to the diluted nature of our convertible notes and outstanding options. As a reminder, with the convertible note, the actual number of new shares outstanding when settled in the future may differ materially from the current technical calculation of EPS as we have the flexibility to settle conversion request either with cash or shares or a combination of both. I would like to highlight our field performance, as our managing partners continue to demonstrate the earning power of our standards operating models during the first half of 2015. Our funeral same-store operations generated 2.5% growth in contract volume which translated into a 4.2% revenue growth, and a 9.2% growth in funeral field EBITDA, which is highly accretive to our earnings with nominal additional depreciation and amortization or interest. The performance of our funeral home acquisition portfolio which is comprised of businesses and acquired since 2011 have been rapidly improving over the first six months, which is reflected by the acquired funeral home EBITDA margin of 39.6% being higher than same-store margin by 120 basis points. Our cemetery operations also leverage an 8.4% growth in revenue for the first six months of 2015, into an additional 17.5% growth in field EBITDA, which together with our higher funeral portfolio performance has produced a year-to-date total field EBITDA margin of 41.7%, a 140 basis points increase and historically high margins. Next I would like to focus on adjusted consolidated EBITDA and adjusted consolidated EBITDA margin which we believe best defines the cash earning power of Carriage as an operating and consolidation platform for our industry. Adjusted consolidated EBITDA for the second quarter increased $900,000 or about 5.4%, primarily from higher revenue and margins in our funeral portfolio, but was up $5.4 million or 17.3% for the first six months, producing a historically high adjusted consolidated EBITDA margin of 30.1%, 210 basis points higher than last year. As a result, our adjusted free cash flow increased 31% to a record $25.4 million, approaching 20% of our revenue. These are important operational and financial milestones for Carriage which should continue over the balance of 2015. Along with the continued strong performance in our field operations, our recent senior leadership reorganization has led to a downward trend in our total overhead as a percent of revenue which should stabilize between 13% and 14% over the near term. Our adjusted net income for the first six months increased $2.6 million or 22.1% to $14.4 million, equal to an adjusted net income margin of 11.8%, another historic high. In summary, Carriage is currently well positioned for continued financial success because of our strong operating margins, increasing adjusted free cash flow, low cost of capital with available financing of $155 million under our credit facility, a very active pipeline of quality acquisition candidates. And a management team committed more than ever before to outstanding execution of our models and strategies to enhance shareholder value. Therefore, we are increasing our rolling fourth quarter outlook, ending June 30, 2016, to a range of $1.57 to $1.61. We look forward to reporting our results to you as we move to the remainder of 2015. Back to you, Mel.

Great job, Viki. I'm going to turn it over to Dave DeCarlo now. Dave has been very active since joining the company full-time in March '14. Initially with me, we spend a lot of time travelling in the country together, over six to nine months last year to take a precise look at where we focus strategically, and profile the kinds of businesses that would best fit into our company. So I'm very honored to turn this over to Dave and let him explain what he and his team have been doing. Dave?

Thank you, Mel. As you know, our corporate development activity entered in high level. We continue to develop relationship with those who we feel are the best independent firms in the nation. Our list is now over 50 firms, and many of them now realize that the best kept secret is our decentralized partnership model which is the perfect solution for their succession planning. Please note, as you know Mel, as well that these firms were not for sale when we knocked on their doors but I can tell you they are now thinking about it, let me tell you why. As I've said before, funeral home and cemetery owners are very proud in caring about their community, and when it comes to selling their business, they wanted to make sure they can protect their own legacy, their employees and maintain and grow the heritage of their families they serve. In fact, three of the four firms we visited last week, voiced these same three concerns to us because to them their biggest concern is what happens to their reputation in the community after the sale. And I can tell you that once I've started explaining the model, I can see their eyes light up, and they explain - when we'll explain our decentralized model because it is the perfect solution for their concerns. Think about it, once they partner with Carriage as a Managing Partner, they keep their name on their signs, not Carriage; they continue to run the business as owners, they are still the boss, they set their own prices, choose their own vendors, and basically determine their own destiny. And another key item in the model that they love is that Carriage takes care of the back office work, IT, HR, legal etcetera, things that distracts them from what they do best, and that is serving families. Because they realized by removing the distractions their life is better, and it allows them more time to serve their families which means they can grow their business and get rewarded through Carriage two incentive frame; one an annual plan for all their employees, including the management partners; and a very good five-year plan for the managing partner himself. So, on the business side you might be wondering if the model was so great, why aren't we making more acquisitions. Well, the reasons are simple; first, we are very selective in who we want to partner with; second, the price has to be fair and reasonable; third, there has to be opportunity for the partners to grow their business; and lastly, we want to make sure that the owners and employee would thrive in our decentralized culture. We have had our share of opportunities to partner with firms but decided not to or we're simply outfit but now we are saying that once these potential partners understand the model, they are starting to realize that what really matters to them is what happens after the sale. And choosing the highest bidder may not be the best choice for then as a result, especially if they want to stay and continue to run their own business. In summary, we have worked over the past year to develop these relationships that we have today and we are optimistic that our average will be producing results, and that's why we have included acquisitions in our overall and fourth quarter outlook. And we are going to continue knocking on doors at stake conventions participating in this circuit, and also launching a marketing campaign to expose the best kept secret in the industry, our decentralized model. We also are pleased to announce that we have added a true industry veteran to our team, Ken Stevens, who spent 20 years with Stuart Enterprises in Senior Executive roles and operations and sales, and then SCI appointed to manage and work with the FDC in the best in the firm they had to sell in 2014. I've known Ken and his family for over 30 years and we are pleased to have him as part of our corporate development team. He will be joined another season veteran, Michael Comby [ph] whose firm we purchased in 2012. Thank you.

Thank you, Dave. I will always say that I've been doing this for long time, and I've been out with Dave and his entire team over the last six to nine months and it's a growing team. And I expect great - not only activity but results over the next, not just short term but for the next three to five years. When we launched the Carriage good to great journey 3.5 years ago at the beginning of 2012. It literally would have been impossible to predict the amazing industry and company specific attractive position that we find ourselves in today. Some of what happened was not under our control. For example, SCI buying Stuart Enterprises. Leaving SCI in Carriage has the two similar profile in over cemetery companies that are in the consolidation and operation business today. To better educate and inform investors, our wide Carriage has become in addition, a superior value creation investment platform. We are updating our investor presentation and company investment profile which will be filed later this month. Afterwards Viki, Ben and I will be selectively travelling to personally visit with and update our largest institutional investors and others interested in Carriage as an investment with little downside risk and much upside reward over the next five years. Speaking partially, I saw 100,000 shares in the second quarter with the procedures to pay off all of my margin debt for the first time. I do not plan to sell shares anytime soon, and frankly, I wish owned a lot more, especially right now. We have created a wonderfully efficient operating and consolidation platform for the best funeral homes and cemeteries in the country, and are now positioned to grow more rapidly, but as Dave said, very selectively my acquisition over the remaining 1.5 years of our first five year pace of the Carriage good to great journey, which will then continue into a second five year pace and should create huge amounts of shareholder value overtime. With that, I'd like to get into questions.

Thank you. [Operator Instructions] And our first question comes from James Fonda from Sidoti & Company. Your line is now open, please go ahead.

Hey guys, how are you?

Hi, James.

I guess I just had a question on the gross margins for the quarter. It exit the scenario where if you don't have enough same-store sale growth that margin won't expand as much as we think or there are other issues going on just specifically this quarter that dragged that down a bit?

Are you looking at the GAAP margins?

Yes, I am.

I don't know what the GAAP margin even is because I don't know how we look at it. But if you will spend more time - I don't think I've meet you, spend more time with me, Viki and Ben, you'll learn that - we didn't have a problem in the second quarter, I'm not exactly sure of what you're talking about but I don't see a problem. And the way I look at this in our trend reports over five quarters and five years is completely different than GAAP numbers.

Right. Okay, that's fine.

I'm not sure if you can understand how we think about it, operate it, and report it internally, you and I won't be on the same page.

Okay, thank you.

And I look forward to that.

Thank you. [Operator Instructions] And our next question comes from Joe Janssen from Barrington Research. Your line is now open, please go ahead.

Thank you. Mel, how are you doing?

I'm good, fantastic. How are you Joe?

Good. Listen, I apologize I missed all the prepared remarks, I was dealing with multiple calls here. But I'm assuming Dave maybe talked about the - maybe just a quick commentary on the acquisition pipeline, I know you have been financially disciplined, anything you see there that peaks your interest, any color on that would be helpful from my perspective. Thanks.

Well, there is a lot of color you missed Joe. All I can tell you is, it's good, and it's getting better and Dave went over quite a bit of that.

Yes, I mentioned that over the past year we have developed relationships with over 50 - what we think, some of the best firms in the nation, and that we are pretty optimistic about the next six to 12 months, and that's why we have put some acquisitions into the group rolling four quarters. So these are relationships that people now understand, our decentralized model and no - can't believe it.

One other thing and I'll give Dave a little more - in modest kudos, willing to give himself and his team. I've spend a lot of time is this industry, over the last 24 years doing corporate development. Certainly the first 10 years I was pretty much gone all the time, learning it and doing it, and I've done selectively quite a bit from that time. In 2007 we started growing again by strategic acquisitions and I did seven, personal in that year. So this is an area that I have a lot of passion about, and I've been out with Dave and his team, Ken Stevens now, well, he talked about a long time better on the street [ph], Michael Comby, who is on his team. They are a dream team. And I've been with them a lot with individual candidates over the last three to six months. They are going around to state conventions, they are presenting the company directly to candidates who are not for sale but who may have a succession issue at some point in the near term but not now. And they activity has been deep, very selective, and with quality businesses and what we consider strategic areas in markets. The activity is beginning to bear fruit, the seeds are growing in lots of places. So I don't think you're going to have long to wait to see some of the fruits being harvested. And we look forward to reporting that but I don't think you would be disappointed.

Great, I appreciate that. And then this is more just a comment, not really a question and - just looking at the stock today, given it's down, and I think it's a bit of an overreaction, and I think you're doing all the right things, you're focusing on the business, you're improving the margin, you're going to make the acquisitions, you're going to make them at the right price, and you will maintain financial discipline. So I think in a long run, sure you will grow more. So congrats and I'll go back in queue. Thank you.

Well, I haven't looked at stock price recently, but as you know, I'm a student of Warren Buffet, and I remember the famous article he wrote as to market of 1986, I'm fine with that because I have an inner score card, 100%, I don't let other people put scores on what we're doing in the company or how I feel about it. I want to tell you that in my comments and I don’t know if you’re on the call I said I sold a 100,000 shares in the second quarter to pay off my remaining margin debt but at this point right now I wish I had owned a lot more Carriage and nothing else, it's a dangerous world out there..

Thank you. And your next question comes from Matt Sherwood from Cooper Creek Partners. Your line is now open. Please go ahead.

I just had a quick question on the outlook, just trying to understand so the previous outlook did not include the rolling four quarter did not include acquisition and--

Yes it did. We didn’t put any more there but it did yes.

So what was the delta in terms of acquisition, did the quarter outlet change excluding the changing acquisitions included in it?

It did a little bit, all we did was just put in there a little bit of overhead, savings on this recent organization. But we didn’t change the - we may have changed a little but same store up a little bit but it really we didn’t add any more acquisitions, that had some in there. We would rather harvest a fruit and show it and close it and then talk about it more and I think as we go along and Dave's team gets more of these pipeline activity really surfacing with NOIs and more predictability on timing, quarterly annually, we will revisit the outlook and make that more clear.

Just broad there sort of the range of EBITDA maybe because you don’t know what--

I would say, we’re certainly going to be adding revenue in the 12 million to 16 million range it's like that.

Were you like mid-30s EBITDA like 30%?

I mean we’re buying bigger better places than that, field EBITDA will be a little higher than that. So it will be a little higher than that, if you look at field EBITDA now in the acquisition portfolio it's almost 40% six months and we’re buying bigger, higher margin places so overtime that acquisition portfolio that’s why we show it for five years. We will have a higher revenue growth profile and margin profile which should fall back right down through the overhead transparency on our reporting to adjusted consolidated EBITDA, adjusted consolidated pre-cash flow and EPS. We are at a sweet spot right now and it's about to get sweeter.

So it sounds like you’re suggesting like 3 million or 4 million of EBITDA from acquisitions?

It's probably right and you know at this point, Dave and his team have been doing this for pretty short amount of time and it takes time to build these relationships. So what I would say and this is how I feel, I can't tell you exactly how it's going to roll out by quarter even by year but I can't tell you what's going to happen in my view over 3 to 5 years and why I'm more excited than ever about our future. We’re going - my anticipation is that once as Dave said, it's a best kept secret in the framework, in the models are presented directly to owners not through brokers they get excited because it's a best of both worlds they have financial security and they have the ability to run their business. We’re just looking at a business right now, I won't say where it is but we will probably buy this business pretty soon and they were ready but they didn’t have a managing partner and they retire, so it took us literally one day after meeting with their family to find the right managing partner which they approved along with us and so it's that kind of collocation on the front end that leads to a very good long term outcome and that kind of reputation that’s the kind of the company we’re will lead to other people wanting to join the company without being auctioned off by an intermediary, that’s where we want to be much like Warren Buffet did or Archer Hathway [ph] and that’s about where we’re.

Now it seems like obviously you’re more focused on the long term but the stock sort of reacted to short term unit difference with your expectations I mean as you look at the past 12 months and the flu seasons that you had and all that I guess just how are you modeling things going forward just so there is left discrepancy between--

Okay, you ask and I'm going to tell and your questions are the right kind of questions. I don’t look at it quarterly, I never had I made that mistake in the 90s. I got on a trendmill and I learned to regret it because this is not a quarterly business, you don’t build a great company and have some kind of score card at the end of every quarter. So if you look at the last five years which is the way I look at the company in the past and the way I look at it in the future. Let's just take 2011, we did a major transformation of our Board and leadership on November 4th, 2011 because I was very unhappy that the framework and the models were not being properly executed or understood by the Board or of the team I had in place at the time so I swept them out. Now what has happened since then, we have gone from a 182 million in revenue for 2011 to 236.5 million in the rolling four quarters in the June 30, that’s about a 7.5%, 7% [indiscernible] revenues. Now what has happened in the field EBITDA margin we have gone from 35% in '11 this is acquisitions and same store to 37.8 in the four quarters ending June 30. And it's the same in the [indiscernible], it's being getting over the last five years, it will continue to get better not every quarter but overtime, we are getting better talent sales managers, product and we have much higher financial revenue because we made some unbelievable moves during the '08 - '09 crisis but we can't keep growing extra-ordinarily but it keeps recurring, that earning power is not going anywhere and it won't go down even we have another black swan of that and it will come down the adjusted consolidated EBITDA which is the right way to look at it, so when you’ve a dynamic transformative high performance culture you change out what is not high performance in the leadership so there is not a lot of noise. I will tell you as of right now we have the best field leadership across the portfolio, the best regional leadership and the best home office leadership we have ever had. It will only get better on execution as we go forward. So what has happened to the adjusted consolidated EBITDA margin over the last five years, 25.2% in our adjusted debit because we had 4.5 million [indiscernible] trust income we were so over funded with our cemeteries in California. We still have that, we pull it out every year. We want them 25.2% on an adjusted basis to 26.5 in '12 to 26.3 we dropped a little bit to 27.3 100 basis points to 28.4 for the last four quarters. We are headed toward a normalized adjusted consolidated EBITDA margin of 30% which we already achieved in the first six months. This company is wired as a platform to create shareholder value with revenue growth from new acquisitions, same store and to add a lot of value for shareholder who could see this other than our quarterly business. It cannot get better than what it is right now and I’ve been doing this kind of thing for a very long time. Sorry for the prolonged answer to your question, but I did it because it was such a good question.

So you have been busy with EBITDA margins that are good on a go-forward basis and could go up even in light of the fact that the flu season was pretty favorable.

We don’t look at flu season, this is all noise, and other people might want to talk about it, it's an excuse for somebody either doing bad or when they do they give it some credit. We’re in the business of getting more business from somebody else who has got it and not requiring something that we cannot control to lead to higher desk, whenever that shows up with the demographic boom bubble I hear it's going to happen someday. We will benefit from it and everybody will say oh that’s great, but we don’t, our same store contracts in general are the same and for the last four quarters through June 30, as they were in 2011. No one else can say that actually, no one. Now we’re focused on the average revenue per contract same store up what you saw in the first six months you will continue to see that.

[Operator Instructions]. And our next question comes from [indiscernible]. Your line is now open. Please go ahead.

It seems to me the nature of your business such that it should be much more predictable and controllable than most of your businesses and yet we have these high level of volatility in year-over-year earnings with 35% or whatever it was in the first quarter gain and then only a 3% this year this quarter. Isn't there something more you can do internally to produce more consistent earnings because that influences the valuation the investors are willing to put the stock when they see this inconsistency in earnings per share they tend to put a lower valuation on that has implications on how you can finance your growth going forward. Accounting people talked to you about using more standardized cost or something to produce more consistent year-over-year gains?

What I would say David and I look forward to getting to know you personally which I have not been able to do, but we’re coming to the Chicago market and I look forward to visit.

Yes I will be meeting with you but I met with you three times in the past.

Well that wasn’t me, I promise you it will be a different mix. I hope it will be a good one because we appreciate your investment in our company. The first quarter is I mean when I got into the business in 1991 you know I thought it was highly predicable and all that, well it is on an annual basis. But it's not on a quarterly basis, the seasonality is much more extreme than you would imagine and you can cause people to die to make more predictable quarters. What that does is when you try to manage it to more predictable performance on a quarterly basis it leads to pretty dangerous thinking and behavior that can have negative consequences on the underlying health of your business. I don’t know another company that has this same long term volume, same store volume in the funeral business history that we do with our models, I would say the same thing about the margins that we’re getting the field EBITDA margins are very transparent but the first quarter was the best quarter we ever had in the history of the company and it was influenced by the flu season. But I remember famously in 2007 the first quarter was similar and an analyst asked me on the call said, well I guess we can assume that the first quarter will be annualized on the funeral results, well I said well you can assume that but blame [ph] it will be wrong and but the way to look at this and we can go over this when we visit is more long term and not quarterly, we didn’t have a bad quarter. We had a good second quarter last year and we had a fantastic first quarter so if you look at the six months for the last 12 months I don’t know understand why people would react the way apparently they are reacting today because it is a wonderful business. It's highly predictable on an annual basis but so much quarterly and it's an amazing thing, you will see a market and I’ve been doing this a long time. One out of every five years and every market is either up materially or down materially on debt rate and there is no reason for it and it could be very different in California that it is in Connecticut. But on the consolidated basis throughout the entire portfolio it's very consistent. So I look forward exploring that in having that discussion with you.

And our last question comes from Alan Weber from Robotti & Company. Your line is now open. Please go ahead.

From the previous comments, I gather you’re still bullish on the company?

I have never been more bullish. I can't change the market, I have learned the hard way, this market has the mind of its own.

Kind of different question, the capital spending in the quarter was substantially higher than normal, can you remind us what it was on - when did you get a returns from that spending?

We have completions of two major new funeral homes both one in College Station and one in - which is really rapidly growing market and we already had a great business and brand, another one is in Katy, Texas [ph] West of Houston which is the fastest growing community, at least it was in America. I'm assuming it's still the case with the decline in energy prices and then we’re building two new places one up in near Middletown, Ohio it's been fabulous business, demographic exchange we have the right managing partner and we’re building a new one down on near [indiscernible] called Emerald Coast, it's fabulous business. So a lot of capital expenditures in the second quarter on these projects, there are funeral home expansions to grow those businesses with great leadership and a lot of great demographics and then we had some cemetery projects that we completed in the second quarter as well. It should bear some earnings recognized revenue and earnings in the third quarter and fourth quarter of the year.

And how do you view kind of the return compared to acquisitions?

Well, in a lot of ways where you have a great business it's a little different. The two business is let's say the one in Middletown and the one in Emerald Coast [indiscernible] where both facilities that grown old. One was in the shopping center, one was Downtown, Middleton and the demographics had moved up to another area. If you do not make strategic moves in this business you will lose the great business that you’ve and these were businesses producing amazing amounts of field EBITDA and free cash flow. So we had to do those both to get in front of a growing market with great leadership and a great brand but also from a defensive point of view. The Katy and the return on that may now be as high as the return on Katy and the one in College Station because those markets are just so rapidly growing and we look at that over a 5 or 10 year period. If you get out in front of those kind of markets you’re going to dominate and the demographics are really awesome. It's kind of a no-brainer you have to do that kind of thing plus acquisitions or you start making acquisitions to make up losses from business as you didn’t grow in it and you start to shrink.

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back to Mr. Payne for any closing remarks.

It's been an interesting call, little different. I want to end like we always do. We had second quarter performance heroes even though we don’t try to manage our company on a quarterly basis for a specific outcome. We never will recognize performance of that quarter what we call high performance heroes. In the Eastern Region, Kim Duffy, Side Group and Johnny Day Funeral Home in Red Bank, New Jersey. Chad Woody, Watson King Funeral Homes, Rockingham North Carolina, Chris Chads, Quarter Dale Funeral Home, Massachusetts and then in the east we have three managing partners from the SEI Divested Packages after the acquisition of [indiscernible]. Scott Stanford, Beverly Funeral Home in Alexandria, Virginia. Patrick Shane, Shane and Son, New Orleans, David Rogers, Garden Memories Funeral Home, Louisiana. In the Central Region, Roger Alan, [indiscernible] Texas, Andy Shimvel, [indiscernible] Funeral Home, Hopkins, Kentucky, Bob Thomas, Malone Funeral Home, Kentucky and Cindy Hotts, Smith Funeral Home, Katy, Texas. Cindy is also in a relatively new acquisition in Katy Texas and that’s where we are building one of the premier places that I mentioned earlier as part of CapEx. In the west region, Don [indiscernible], Matt Simson, Diggen Funeral Chapel, Escalon, California, Justin [indiscernible] City California, Steve Moore, Mountain Memorial Park, California and Adam Mills, Austin Funeral Home, Columbia Mortuary in Montana. Four of these high performance heroes in the second quarter were also high performance heroes in the first quarter, that’s Chris Chattes, Patrick Shane and Andy Shimvel and Steve Moore. We also have and we’re starting to recognize how important people here in our home office support teams are to the success of our people as Dave mentioned. Acquisition that I cannot believe the support they get from the home office support teams because we view them as our customers and I just like to mention three high performance heroes here in our home office for the second quarter. For legal, Whitney Fidge, HR Payroll and Risk Management and Treasured and IT, Jeff Parker and with that I want to thank everyone or their attention and support and we look forward to reporting our future success which we anticipate will be very good. Thank you.

Ladies and gentlemen thank you participating in today's conference. This does conclude today's program. You may all disconnect. Everyone have a great day.